Loss to the Exchequer.

According to Niti Aayog, considering total national ethanol blending volumes of 332 crore litre, revenue loss to the central government due to replacement of petrol by ethanol amounts to Rs. 10,950 crore per annum. This figure is limited to the loss in excise duty on petrol. The replacement cost will shoot by to 33000 Crore by 2025

The NA however did not mention the cost of sugarcane subsidy. The farmer receives a subsidy of Rs 55 per ton. Therefore, the total subsidy on 332 crore litre ethanol is 260 Crore. By 2025, this figure will rise to 798 Crores. Even if the farmer gets a better price for their sugarcane from ethanol manufacturers, will the government dare reduce the subsidy on sugarcane?

Impact on food prices

As more land gets diverted for sugarcane, the manufacture and supply of domestic sugar will reduce thereby increasing the price of sugar. Besides sugar, the Niti Aayog also recommends the use of maize, rice from Food corporation of India and broken rice.

Rice rots in FCI godowns because of poor logistics and not low demand. There are already allegations that wheat is allowed to rot in government godowns so that it can be divert towards alcohol production. Demand on rice for ethanol will compound this problem creating sever shortages towards government food distribution schemes.

In the United States, maize is primarily used to manufacture ethanol. According to a study (https://doi.org/10.1016/j.cesx.2021.100090) U.S. government policies aiming to stimulate demand in the domestic grain markets by promoting bioethanol blending in conventional gasoline appears to have resulted in periodically raising costs for the food processing industries, and for farmers raising stock for meat.

Impact on the Environment

The study mentioned above concludes that There is evidence that current international policies have caused environmental degradation greater than the fossil fuels they were purported to replace. This degradation includes the release of CO2 from the burning of ethanol as well as that released during cultivation and processing of the sugarcane.